Dumb question of the day, why are new JD so much less expensive?
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    mackguy's Avatar
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    Dumb question of the day, why are new JD so much less expensive?

    This isn't totally "off topic" but I didn't see a good "general discussion" place and since it's not really related to a specific tractor/series and is more just a for fun thing than technical I figured it should go here..

    We have a 1993 LX176 that was purchased new by my wife's grandfather, as such we have all original receipts, records etc.

    From what I can find the LX176 was pretty much an entry level mower, with the 173 as the only less expensive option, only difference being no CVT.

    Now the sales price on this 14HP 38" cut mower (with bagger) in 1993 was $3800 if memory serves correctly (maybe $3600?).. adjusted for inflation to 2015 that's around $5800 for an entry level riding mower.

    Now I know they say the "box store" versions are cheaper than dealer versions, but even so $5800 today is putting you in something like an X500 that appears to be a LOT more tractor than the LX176 in about every way.

    Even the unadjusted $3800 puts you mid-range over 20hp and 48" cut.

    Do they just build more efficiently now, or have there been "cost cutting" going into them, or what's the story?

    I even see nice 176's on Craigslist for almost $2k...
    1993 LX176 - 3rd generation family ownership

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    Jer
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    You make a very good point.

    I don't know, but I'd guess that they are building them cheaper now. I'm sure someone with more knowledge can pipe in.

    -J.
    2014 JD 5075M (just barely pre T IV emissions), H310 with bucket mounted grapple, HLA powertine forks, 8' HLA snowblade, Schulte SDX-840 Snowblower, Rhino 12' Flail, 6' Sweepster 3pt PTO broom, hydraulic toplink from CCM, LED lights front and back, big pile of 3pt implements.

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    I have experience in automotive manufacturing but not tractors. Probably a lot of commonalities though. Production has definitely gotten a lot more efficient these days but I think that pressure from the cheaper off-shore stuff has both forced JD to bring costs down but also eaten into their profits a bit. Some stuff is what they call VA/VE'd (Value Analysis/ Value Engineered) out. An example of this is a moulded-in-colour hood versus a stamped steel, welded and painted hood.

    It's the same thing with other products that are made here (USA and Canada where I am) in that they will outsource tooling as well as some components to China, India, etc. You still end up with a machine that is "Built in the USA" but a lot of the background pieces aren't. For example, in my trade of tool and die maker, 30 years ago we used to be very busy with tooling to stamp parts. Now a lot of the tooling is built in China, shipped here and fine tuned here. The overall cost is much less and the selling price of the tractor comes down.

    Of course this is all at the sacrifice of jobs in your home country. I don't want to get political but it is us who not only push down the prices but as a result end up losing their jobs.

    You may not see it but this pressure forces public as well as private companies to find ways to reduce costs. That stamping press that used to be built in the USA is now built in a third world country with cheaper labour. Instead of costing $5 million it now costs $2 million and costing models change with it. Less capital to pay for.
    Lorne
    My century barn redo

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    John Deere 314 Sold
    Grew up with a John Deere 140 and all the goodies

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    mackguy's Avatar
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    I'm actually an engineer for a class 8 truck manufacturer, and know exactly what you mean with all of these, I'm just curious about more of the specifics from the J-D side.

    It seems to me in most cases the issue is trying to minimize the year over year increase in cost, but in J-D case they price has dropped dramatically for the entry level. Not sure if the full range farm equipment stuff has dropped as much.

    I always assumed that they had a new "cheaper" grade for the box stores, but still had the same grade for everything else... that was before I saw the invoice for this '93.

    Ironically I feel like they've moved into a market where it's hard to win... Friend of ours recently bought a new mower from Lowes. Got a Husqvarna instead of a J-D. The deciding point? $100.

    Of course looking at lowes from what I see you just need to decide what color you like... Green (JD) Red (Troy-Built) or orange (Hq)... look pretty much the same other than that.

    Heck somewhere I found a (new) replacement 38" deck for our LX and it was $1200.. For just $300 more I could get a brand new D105 with more HP and a bigger deck.
    Shop John Deere D105 Automatic 42-in Riding Lawn Mower with Briggs & Stratton Engine and Mulching Capable at Lowes.com

    I Suppose you're right though, just having the same components made even in NAFTA countries could present a significant cost savings

    Quote Originally Posted by techie1961 View Post
    I have experience in automotive manufacturing but not tractors. Probably a lot of commonalities though. Production has definitely gotten a lot more efficient these days but I think that pressure from the cheaper off-shore stuff has both forced JD to bring costs down but also eaten into their profits a bit. Some stuff is what they call VA/VE'd (Value Analysis/ Value Engineered) out. An example of this is a moulded-in-colour hood versus a stamped steel, welded and painted hood.

    It's the same thing with other products that are made here (USA and Canada where I am) in that they will outsource tooling as well as some components to China, India, etc. You still end up with a machine that is "Built in the USA" but a lot of the background pieces aren't. For example, in my trade of tool and die maker, 30 years ago we used to be very busy with tooling to stamp parts. Now a lot of the tooling is built in China, shipped here and fine tuned here. The overall cost is much less and the selling price of the tractor comes down.

    Of course this is all at the sacrifice of jobs in your home country. I don't want to get political but it is us who not only push down the prices but as a result end up losing their jobs.

    You may not see it but this pressure forces public as well as private companies to find ways to reduce costs. That stamping press that used to be built in the USA is now built in a third world country with cheaper labour. Instead of costing $5 million it now costs $2 million and costing models change with it. Less capital to pay for.
    Levi and techie1961 like this.
    1993 LX176 - 3rd generation family ownership

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    techie1961's Avatar
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    It's crazy how things are trending. It used to be that JD was a product that people would seek out knowing the quality and durability were there. With the box store stuff, most people realize that it isn't really a JD and then the price factor wins out. Just one look at the units that are in the big box stores and you can see that even though it is built by JD, it certainly isn't comparable to a true garden tractor JD.

    While "entry" level is still marketed to the same people, the product is completely redefined. A box store JD isn't going to be around like an "entry" level that you purchased 20-30 years ago. Compare it to fridges and you see the same thing. You could buy the cheapest fridge 30 years ago and there is a chance that there are still some running. The cheapest ones now only last maybe five years.
    Levi likes this.
    Lorne
    My century barn redo

    1999 John Deere 455 AWS
    1997 John Deere 455 AWS
    2001 John Deere 445 AWS
    1994 John Deere 425 (Sold)
    60" mower, 60" mower, 60" mower with JD Mulch Kit, 54" Mower, MC519 and Powerflow, 47" Snow Blower, 54" blade with bucket add-on (Plucket), 54" blade, 54" blade, 51" Broom, and garden cart
    John Deere 314 Sold
    Grew up with a John Deere 140 and all the goodies

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    SulleyBear's Avatar
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    John Deere has dramaticaly adjusted their distribution system and dealer network, which produced huge cost savings. The days of the mom and pop dealer are pretty much gone. There was a time when you could be a John Deere "Residential or Consumer Dealer" and it required a committment of $200,000 of product purchase per year and at least $30,000 of parts business. That is no longer the case.

    Look at the simple cost of doing business. In the old days they printed all of the parts catalogs and reference books and every dealer had rows and banks of books. Think of the money they spent on brochures and promotional material as compared to today. Heck even such things as the simple phone bills. 20 Years ago my phone bills for my company used to consistently be $22k to $30k for long distance, land lines, toll free numbers and cell phones. Now our total telecommunications cost in a year is less than the average month 20 years ago. Those cost savings have happened across the various businesses. I used to pay $30k per year for publication subscriptions and database respources. Now, I have the same for $400 per year because of the internet. So between phone bills and publications and database subscriptions I used to spend $55,000 to $60,000, now the total is $3,200 for 2014. Those savings all add up. Unlike Deere, my charges for my services have gone up.....

    Chances are the very dealer from which your tractor was sold is no longer owned by the same people and it may no longer be in the same physical location. Just as farming in the U.S. post WWII could sustain a family with an 80 to 100 acre farm, now farming requires several hundreds or thousands of acres to successfully operate with the costs associated with it and the profits available. We used to have 12 John Deere retail dealers within a 100 mile radius. Now we have 4 and three are owned by the same group.

    I am told that John Deere no longer offers any "Residential Dealership New Opportunities" and the few which remain are under a lot of pressure to purchase at least $2 million dollars worth of equipment inventory and at least $500,000 worth of parts and accessories. Even with the 1025R at a $13k retail, it would take 154 sales of $1025R models at retail to sell the $2 million in equipment inventory. Looking at it another way, with the average "consumer" unit at $4,000 it requires 500 unit sales per year to maintain your dealership with Deere. This is why you see so many dealerships being consolidated into the holding groups where they own several. My local dealer is one of I believe 19 in the same group. 5 years ago, those 19 had probably 12 different owners.

    The effeciencies which come from CAD and all of the manufacuring technology obviously help but you know all about that. I work with a number of Tool and Die Shops and as you mentioned, often tooling is built overseas and then "finished" or :tweaked" here, which reduces the costs, of course at the expense of North American jobs. Also, the tractors, while still well built are not the quality they once were. I have a 1997 Model 455 and it has very heavy steel frames and it extremely well built. My next door neighbor bought a D Series last summer and while it is a good mower, it is much lighter and has less materials than the unit you own.

    So, business effeciencies across the board, reducing acquisition costs, reducing selling costs, reducing the labor to build and assemble with robotics and technology and building a product which is designed to last FAR fewer years, and the costs have remained very competative. Actually, they have had no net increase when considering inflation adjusted dollars and their selling prices per unit in many cases are less when using the time cost of money.

    Look at appliances, the same things have occured. I know that the largest appliance company in the U.S. now engineers their appliances with a life expectancy of 5 to 7 years. Mrs Bear and I have had the same appliances for 20 years and in the case of two extra garage refrigs which are 30 years plus old. Plus these appliances can be repaired when needed and many of the new ones can't. Try and find a real TV repairman today and if you are lucky, chances are he or she will be 55 years old or older. People simply throw away TV's now when they fail. Some of Us older people find this disposable product theory frustrating and simply wasteful especially when there is so much emphasis on reducing waste.

    And of course there is globalization of the economy and the cost effeciencies of the affect of various currencies and tax rates but I will leave that for another day......
    Last edited by SulleyBear; 04-16-2015 at 10:55 PM.

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    mackguy's Avatar
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    Thanks for the thoughtful response, it makes a lot of sense.

    I do know the dealer that sold it originally is still there but no idea if it's under the same ownership.

    I'm happy with my 22 year old that's running and mowing great. Also love that it's got family history..
    1993 LX176 - 3rd generation family ownership

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    Quote Originally Posted by mackguy View Post
    Thanks for the thoughtful response, it makes a lot of sense.

    I do know the dealer that sold it originally is still there but no idea if it's under the same ownership.

    I'm happy with my 22 year old that's running and mowing great. Also love that it's got family history..
    This era of tractors is very well made. Deere also does a great job keeping parts available for them. Maintained well, this tractor should last a very long time. While the new D Series are nice units, they just aren't built as well.

    But the reality is that the vast majority of people use these tractors like people use their SUV's. Their use is far lighter and less strenuous than the engineers intended. 81% of SUV drivers polled thought "Off Road" use meant parking lots, drive ways and other such "light use". In reality, as you know, the off road was designed to be like the Rubicon course, something completely impassable by an automobile.

    Having a John Deere tractor is a lot like marrying the right woman. Choose the right one and treat her with love and respect and take great care of her and she will never disappoint you. Frequently she will surprise you in pleasant ways. And NEVER take her for granted, because they likely just don't make anymore quite like her.

    Together you will build a lifetime of memories, share joyful times and support one another when sad time come and they will, usually when you least expect it. Always remember that those shiny new models may look interesting from time to time but the one you share your life with deserves a lifetime of commitment. After all, promises made should be promises kept.
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    mackguy's Avatar
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    There's a point well taken here as well.. I wonder how much consumer habits have changed with regard to upgrade frequency.

    e.g. my grandfather bought a new J-D mower in 1977 and continued using it until his death in 2007... I wouldn't be surprised if my uncle (who inherited the house) still runs it now.. example 2 is our very own LX purchased for a premium and still in the same family 22 years on.

    From my family examples it seemed like J-D was sort of a goal... you started out with the Craftsman or whatever store brand you could afford, and later on in life you stepped up to the Deere that lasted the rest of your life... and if your kids and grandkids were lucky they got to take advantage of the investment.

    I remember my other grandfather always lusted after a J-D but bought inferior brands because he couldn't justify the markup. I recall the last mower he got he was proud had a hydrostatic transmission with the hand operated lever rather than foot control, but if you didn't hold the lever it would slowly move back to stopped. He had mentioned that he liked the foot operated feature on the J-D but couldn't justify the extra $2k or so at the time.

    It's not crazy to think J-D decided enough with having people spend their first several years with another brand and hope they step up to J-D... why not get them early with a lower priced model and hope they stick with J-D?

    It's just surprising to me that LX176 money now gets you an X500!
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    1993 LX176 - 3rd generation family ownership

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    Quote Originally Posted by mackguy View Post
    There's a point well taken here as well.. I wonder how much consumer habits have changed with regard to upgrade frequency.

    e.g. my grandfather bought a new J-D mower in 1977 and continued using it until his death in 2007... I wouldn't be surprised if my uncle (who inherited the house) still runs it now.. example 2 is our very own LX purchased for a premium and still in the same family 22 years on.

    From my family examples it seemed like J-D was sort of a goal... you started out with the Craftsman or whatever store brand you could afford, and later on in life you stepped up to the Deere that lasted the rest of your life... and if your kids and grandkids were lucky they got to take advantage of the investment.

    I remember my other grandfather always lusted after a J-D but bought inferior brands because he couldn't justify the markup. I recall the last mower he got he was proud had a hydrostatic transmission with the hand operated lever rather than foot control, but if you didn't hold the lever it would slowly move back to stopped. He had mentioned that he liked the foot operated feature on the J-D but couldn't justify the extra $2k or so at the time.

    It's not crazy to think J-D decided enough with having people spend their first several years with another brand and hope they step up to J-D... why not get them early with a lower priced model and hope they stick with J-D?

    It's just surprising to me that LX176 money now gets you an X500!
    An 18HP Agway tractor here. We are now on our fifth piece of JD equipment. Hats excluded.
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